In virtually every measurement of the business world, women trail men. Women earn $0.77 for every dollar that a man earns (and it is always important to point out that this figure relates to white women; Black and Latina women and men make even less comparably). Only 32 CEOs on the Fortune 500 list are women, and this is an all time high. Women face significant gender bias in the workplace that impacts their ability to advance to higher levels of management. Women continue to work to find mentors to help them succeed, and get appropriate funding from venture capitalists.
But there is one area of business where women have a significant advantage over their male counterparts: crowdfunding.
Crowdfunding or crowd sourcing is when a company gets investments from many small, private investors in order to create a product, found a company, expand operations, or develop a new location. They generally involve tiered rewards at different funding levels, and cater to direct customers rather than investors in a boardroom. These investor customers are often called backers.
It turns out that women are substantially better at crowdfunding than men. In fact, women are 32% more successful than men in terms of getting their projects fully funded. They also tend to raise more dollars per backer than men; women raise on average $87 per individual investor while men raise $83.
This is particularly interesting since men start more than twice the number of campaigns that women do; 139,000 over 2015 and 2016, compared to 55,000 from women during that same time period. This data is true across all sectors and all regions of the world.
PwC, the well known research group that completed the study, raised two major discussion points based on the study. First, there is now demonstrable proof that women excel at crowdfunding, where they are able to access investors unimpeded by inherent biases. Second, PwC suggested that these findings can be used to combat the societal and business norms which say that women are just not suited to be entrepreneurs. These norms make it significantly more difficult for women to access investments that could be driving their businesses.
The startup world has been growing more interested in crowdfunding as well. In many situations, companies pre-sell their products or services through their crowdfunding campaign. This gives them an order book to show to VC firms so that they can demonstrate interest in their products. Venture capital companies may therefore be more interested in products and services offered, allowing women easier access to the broader world of business funding.
So why are women more likely to succeed at crowdfunding than men? The answers are, of course, multi-faceted.
The first factor may be a simple numbers game. Since men in general have better access to business funding through traditional means, the ideas that aren’t getting picked up may have less appeal. Women, meanwhile, are frequently unable to get their great ideas funded. They may simply be bringing better ideas to the crowdfunding table.
Next, women tend to use more inclusive and more emotional language in their crowdfunding pitches and description. They talk about excitement around the product and the benefits it will have. They are also more likely to say “we.” Men, on the other hand, are more likely to use business terminology, which can be dense and unappealing to a potential customer.
Some sources also indicate that since the creator themselves is less of a focus when crowdfunding, this may ease inherent biases by removing gender from the equation; a potential investor is more likely to focus on the product itself.
It is also important to remember that, when looking simply at the dollars of capital raised by men and women globally during crowdfunding campaigns, men raise many more dollars overall. This can be attributed to the number of men who pursue crowdfunding compared to women, and the more ambitious financial goals that men set for their campaigns.
While crowdfunding is offering access to many women who have been traditionally shut out of the typical business funding process, it is important to remember that this is not a substitute for achieving gender parity in the workplace. To some degree, simply having more women become successful CEOs may help the field to course correct. Women often cite a lack of mentors as one of the reasons they struggle to succeed in business, particularly in STEM fields.
By increasing the number of women at the highest level of business, there may be more available mentors to help more women succeed. But also pushing for inclusive and unbiased policies in the workplace will continue to be a key factor for ongoing success.